United States Oil (USO) worries about oversupply and a slowing global economy
U.S. oil prices rose on Wednesday to claw back part of their more than 5 percent losses from the previous session, with worries about oversupply and a slowing global economy keeping markets under pressure.
U.S. crude oil had climbed 37 cents, or 0.8 percent, to $46.24 per barrel by 0122 GMT, after plunging 7.3 percent the day before in a session when it touched its lowest since August last year at $45.79.
Global benchmark Brent was up 0.85 percent, or 49 cents, at $56.75 per barrel. It dropped 5.62 percent on Tuesday, at one point marking a 14-month low of $56.16 a barrel.
U.S. crude stocks rose unexpectedly last week, while gasoline inventories increased, industry group the American Petroleum Institute said on Tuesday.
If the build in crude stockpiles is confirmed by U.S. government data Wednesday, it will be the first increase in three weeks.
The U.S. government has said shale production is expected to climb to over 8 million barrels per day (bpd) for the first time on record by the end of December.
Russian oil output hit a record 11.42 million bpd this month, an industry source told Reuters.
However, there were some factors tightening supply, with Libya’s state oil company declaring force majeure at the country’s largest oilfield.
That came a week after the firm announced a contractual waiver on exports from the field following its seizure by protesters.
Elsewhere, a speech marking 40 years of market liberalization by Chinese President Xi Jinping offered no specific support measures for the second largest economy, disappointing investors who were expecting fiscal policy loosening and a tax cut.
China’s Shanghai crude futures fell 5.95 percent in tandem with Brent’s decline overnight to trade at 388.9 yuan ($56.41) per barrel on Wednesday, the lowest level since their launch in March.
Oil market investors were also turning their attention to the outcome of a two-day meeting of the U.S. Federal Reserve that is due to end on Wednesday.
Overall, the bias in prices is: Downwards
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 12.49.
The projected upper bound is: 10.57.
The projected lower bound is: 8.77.
The projected closing price is: 9.67.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 16 white candles and 32 black candles for a net of 16 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 7.4074. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 12 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 28.65. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 10 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -284.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 12 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 10 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed down -0.660 at 9.790. Volume was 110% above average (neutral) and Bollinger Bands were 13% narrower than normal.
Open High Low Close Volume___
10.410 10.410 9.730 9.790 56,381,948
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 10.80 12.72 13.66
Volatility: 55 48 37
Volume: 38,030,412 33,922,460 23,310,136
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
UNTD ST OIL FUND is currently 28.3% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of USO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on USO and have had this outlook for the last 43 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.
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